In February, construction input prices saw a 0.4% increase compared to the previous month, per an analysis by Associated Builders and Contractors (ABC) of the U.S. Bureau of Labor Statistics Producer Price Index data. A similar 0.4% rise was observed for nonresidential construction input prices.
–

Compared to a year ago, overall construction input prices have grown by 2.6%, while nonresidential construction input prices have increased by 2.8%. Natural gas prices significantly dropped 41.4% in February, while crude petroleum prices went up by 7.3%. On the other hand, unprocessed energy materials prices decreased by 9.1% during the month.
–
ABC Chief Economist Anirban Basu notes that although February’s construction materials price inflation data seems mild, a closer look reveals persistent price pressures. For instance, brick and structural clay tile prices rose 3.4% for the month and nearly 9% over the past year. Additionally, copper wire and cable prices increased by 3.3% monthly and have soared 40% since February 2020. Despite recent declines in energy prices, there remains ample evidence of ongoing materials price inflation and supply chain challenges.
–
Basu points out that recession risks continue to grow with increasing pressure on the global banking system and the Federal Reserve still grappling with excess inflation. While contractors involved in public construction and industrial megaprojects may fare well in the coming years, many other contractors face mounting challenges due to higher capital costs, tightening financial conditions, and rising construction service costs. These factors could eventually erode backlog, which is currently high according to ABC’s Construction Backlog Indicator, resulting in further difficulties for contractors in 2024 and 2025.
–
In summary, although current data suggests a modest increase in construction input prices, a closer examination reveals underlying pressures that could impact the industry. However, it is crucial to remain optimistic and proactive in addressing these challenges, as contractors can adapt to fluctuating market conditions and thrive in the ever-evolving construction landscape.

–